Interview: Hussein S Al Amoudi
What sort of challenges do developers face in terms of ensuring adequate and necessary infrastructure for large mixed-use projects?
HUSSEIN S AL AMOUDI: It is no surprise that uncertainty over the business environment and the availability of financing for projects has increased over the past 12 months, and this has led to a reassessment of many planned developments. However, the long-term fundamental drivers for construction demand here in the Kingdom remain strong. Economic growth, population increase and further urbanisation will continue to place significant pressures on housing, transport, utilities and social infrastructure.
Vision 2030 gives us confidence that many of these challenges will be overcome and that the necessary infrastructure will be provided to support the nation’s ongoing economic development. Of course, appropriate infrastructure is also essential for developers looking to meet the growing demand for real estate in the Kingdom, whether that be commercial, industrial, residential or mixed-use.
Creating a residential offering that is tailored to the lifestyles that the new generation of young Saudis aspire to must be a key driver for all of us in the sector. Indeed, we are seeing a major shift in what people want. Rather than private family units, they are looking for a sense of community, more shared facilities and vertical compounds. These aspirations are being met here in Jeddah through projects such as the Jeddah/Kingdom Tower, as well as our efforts to develop Mayasem, a 160-ha development in the Obhur area that has been specifically designed to enhance community identity.
How sensitive has the property market in Jeddah been to the macroeconomic environment, particularly lower oil prices and subsidy reductions?
AL AMOUDI: While the property market in Jeddah is currently experiencing some challenges as a result of changes in the macroeconomic environment, the sector is set for significant change in line with the government’s recently unveiled Vision 2030. This wide-ranging policy document plans to transform the Kingdom’s economy so that growth is driven by the non-oil sector. This is of course going to require a major mindset shift across the whole of society.
One of the major challenges that we face is the development of liveable, sustainable communities at a time of rapid urban expansion. We believe passionately that our responsibilities extend far beyond just bricks and mortar, and that the development of sustainable communities is just as important. Newly built environments, catering to the rising demand for housing, and underpinned by a large, young population, will need to engender a sense of belonging if they are to be viable.
As a result, our strategy has always been focused on the long term, and I remain optimistic about the future of the real estate market and related sectors in Jeddah and the Kingdom.
This optimism is further underscored by the positive response from the government to the new macroeconomic climate we face. For example, the subsidy cuts on utilities and petrol have led to a much-needed correction in rental prices, which had been experiencing inflation. Of course, it is not just developers who are set to benefit. Banks, for instance, will likely play a key role in financing the housing sector, and perhaps there will even be the need for a dedicated housing bank.
What can be done to promote foreign investment into development projects in Jeddah?
AL AMOUDI: Vision 2030 articulates impressive reform in various sectors and will convert the oil-dependent Kingdom into a modern, efficient and diversified economy that can attract substantial foreign investment to all sectors.
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